HYFM - Earnings call transcript Q1 2021 | Hydrofarm Holdings Group, Inc.

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Operator

Good day, ladies and gentlemen, and thank you for standing-by. Welcome to the Hydrofarm Holdings Group First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded today, May 13, 2021. I will now like to turn the call over to Mr. Fitzhugh Taylor, Managing Director at ICR to begin.

Fitzhugh Taylor

good and Shamali, you, afternoon. Thank the With Hydrofarm’s company’s is Toler, today and me Chief Chief Officer. the on Chairman Lindeman, Executive Bill John call Officer; Financial and XXXX have after today close. our everyone X-K market access now and Form should first By quarter earnings release issued to www.hydrofarm.com. are documents at the of Hydrofarm’s Investor These section on website available

therefore put Before we uncertainties cause include please SEC guarantees statements. that reliance and our forward-looking These remarks, future of that you future risks discussion for forward-looking to also These are financial and all of our statements not we not that subject could begin note impact our condition. you performance, recent our them. detailed could on risks to and filings differ what materially looking undue the formal results from to refer will operating discussions should statements a are today results We expect. numerous more actual of

prepared can which call, today’s additional earnings we during believe now an of not presentation performance. information Lastly, results in isolation non-GAAP should Bill? this With in a GAAP be available measures I will measures, in evaluating as our to to GAAP the accordance are reconciliations for and would call turn like substitute comparable The considered Toler. our to we be or that, over discuss useful release. with Bill

Bill Toler

and afternoon, good everyone. Fitzhugh, you, Thank

as straight XX.X% QX greater We are quarter XX%. grows grew pleased sales our continued with organic than revenues the business last our of year, in versus momentum completing third

year’s of record an first over last adjusted from We’re EBITDA also of increase a pleased quarter. million to XXX% report $X.X

margin and and This board markets both markets new is and our brands all across product the again, Our revenue includes once growth that demonstrated our virtually as virtually our larger sales sales across geographies. and our and of are mature benefit lines And and all a was proprietary of continue categories. to our total a part expansion. we EBITDA mix of drives from growth, by brands as favorable becoming

the but growth SG&A, of fact also of in unique exciting despite in the supplies, distributor more on total spending agriculture SG&A, billion our The results, percent are we’re differentiated Our went down. controlled strength leading actual gave as of dollars manufacturer serving our indicative us positioning market. only not leverage hydroponic a of branded a quarter, this year over $X.X last our environment

As gardening, approvals by brought sustainable a of a curve in market is related we legislative the the growth and increase and it’s you know, cannabis ongoing that a domestic believe and technology to on category. in innings early strength significant hydroponic home advances broad-based many in within of brand innovation,

of will ESG practices We believe advantages continue these mainstream and hydroponics longer-term also efficient to becoming more the expand. farming are

in give purchase Hydrofarm. Not stay own does brands them to from as branded that stickiness growers their differentiated the differentiated While that the with tend us want, only offerings primarily we it operating worth tailwind, a strong results. with of sales we are XX% noting Over it our our is from of give you products our the that successful formula. are driver hydroponic a channel come

So That few last the margins in these improvement also formula displayed over profitability advantageous us. evident drive the quarters. for products we is

enhancing building, focus and our distribution drivers, businesses. innovation will value acquisition on adding three the product remain of ahead, and look we growth brand relationships As strategic

talking Let our about the acquisition. me on quickly before recent touch first two

brand commitment building. First and innovation is to the

continued our brands. we Phantom proprietary own our broadly little of brands led profiles, new by sales XX% key and represent has is our know, that the We and late push lights the example have lights QX. more our two types we on late in is controlled to in environment growth of Building bulk first are led opportunity. of that With selling recent of form products PhotoBio to the a us A the began both quarter. great looking in cultivate in of for innovation PhotoBio believe success TX, unveiling crops in we our brands. started T agriculture. MX innovation a PhotoBio factor, proprietary The the you the of investments margin better smart these in currently successfully all which selling proprietary preferred for and growers PhotoBio As our affordable

and well included brands and and additional including the supplies, by as also developed grade the proprietary development existing product We brands lab quarter, The branded This launch products grow innovative GrowthStar, of products newest product our like media suppliers development teams, premium or our partner in-house a from nutrients additions new enter further XX nutrients for soil, new the in to introduced success, as and first brand autopilot, or preferred line categories. roots of either portfolio proprietary our all organics. expand together rock products. plant the were testers team

brands continue strategic distribution to we our focus adding portfolio. preferred Secondly, to relationships and on

crops of the are available a quality quarter the in us already the become in signed markets. exclusive Canada to their This has class in end to nutrients best strategic one Advance of previously Canadian fastest Canada. most with be the we in to of the XXXX, space. by nutrients, true of respected and first And most make CEA to has genetic new in brands mentioned we introduce growers selling nutrient agreement the partnership brands February, in who As potential unlock and advanced early our products already the one will distribution their largest eager allowed of highest

footprint our to broaden Lastly, one industry is to priorities of our enhancing top strengthen product portfolio. value acquire and businesses our

nutrients across product our and grow focused for are for particular, because and segments, remain categories recurring in and largely consumables our the we these revenue product partners. have we categories on all media growers retail been While Hydrofarm opportunistic

highly to help and of leading are acquisition growth these the and that very strong of yield have end, currently April, have we brands. of and we’re the Additionally, of nutritional proprietary EBITDA healthy own all crops. the and increase and brands a XX, plant don’t late stages our many respected used quality margins of plant supplier in categories manufacturer announced To HEAVY in products

in an XXX we the about we just a highly opportunity existing our our revenue has HEAVY In to are Furthermore, to the HEAVY compatible accretive strong a this line footprint and the EBITDA sales product four believe a sold and we with X,XXX in to addition to expand complimentary compelling be U.S. have business only excellent XX impressive and and and expect within product states. growth XX% margins currently as financial line, profile adjusted be of and at is year its beyond. of stores XX

and to growing XX as will into acquisition solidify the team family. a position Hydrofarm HEAVY as And the of fast choice for we believe further are welcome acquirer brand the industry. talented nutrient in this fragmented proprietary excited Hydrofarm We fits and the our in well this category highly

executing you hard at work, back we December see, can IPO. I out So we're in hope our strategies at laid

With the recent stock our credit we borrowing successful offering completion facility, our since the would balance sheet common secondary we from of have became new of and capacity have public. our increased further strengthened

in we've our as acquisition offerings, positioned are of service in to CEA, only the capitalize in strategy well continue the of opportunity believe going Coupled innovative products unprecedented result, surface front with we we on high growth, organic our invest are are uniquely scratched our to as our and performing growth and we us. well As positioned own convinced execute to forward. strong we a

it John our update some Now XXXX discuss turn in first John? on results the over I'll and guidance. financial detailed to to quarter to provide

John Lindeman

everyone. afternoon, good and Bill, Thanks,

sales to report pleased $XXX.X prior million very period. terms sales of results. included first for for are We quarter a Net in year That quarter from million quarter the XX.X% adjusted first and EBITDA. record Hydrofarm $XX.X increased in XXXX the to

the predominantly over diverse multiple continues quarter in sales year-over-year end growth be increased To volume top-line different broad markets. States. with you growth across how some was, to we experienced the U.S. growth and perspective driven XXX% XX Our give on demand in

today, in quarters continue States and expect our in While some in of States years. significantly size terms are over modest many still of we these sales coming these the dollar grow to to relatively

first in in also outpaced proprietary which and growth distributed particularly brands. our was sales Our our preferred quarter the strong brands,

gross million to and profit XX.X% compared gross profit also to This in which products, saw was million. branded $XX.X first margin primarily carry $XX.X We higher proprietary typically the gross at from a towards weighted improvement more heavily period year driven profit quarter, profit year-over-year last more margin by natural sales distributed in a brands. mix, improved pure margin same double than than

our scale to Selling, in incremental benefits within enhanced initiatives running strategy. with increase The further in distribution primarily expense first internal costs profit million achieved growth in our year margin. was our labor the quarter associated compared centers, increased $XX.X own increased to gross $XX.X general which efficiency administrative supporting also We public period. of million due long-term the XXXX, in SG&A company and to to ago a related

costs, including fees, compensation acquisition higher costs costs, realized consulting we related share-based expenses. and comp Specifically, insurance

Excluding prior the sales compensation million year amortization expenses, period. or sales in in $XX.X SG&A depreciation, share-based net or versus $XX.X XX.X% on was XX.X% and net million

quarter the in per comparative diluted prior XXXX this and in outstanding the was last were million realized XXXX of December, our common $X.XX of quarter. attributable on year. shares million a for approximately significant share $X.X that So IPO. million during count Reported of diluted or per basis, year or $X.X Weighted reflect the prior not we year the Please does compared $X.XX income to share the the $XX note for leverage share period. share million operating stockholders quarter average loss first net $XX.X approximately diluted to net – impact

is pro reconciliation believe contained IPO $X.XX calculations forma and comparison share forma a pro million outstanding the earnings this in pro helpful in quarter, quarter to average calculated we the forma On the occurred pro comparing compared at had page non-GAAP which on And was ago January weighted as forma million $X.X to non-GAAP per diluted The in of earliest diluted so $X.XX additional per loss be income periods. diluted performance precise our period. XXXX, year adjusted share last beginning prior We in similar measure income adjusted or approximately or release could the net the have of the containing for detailed $X.X basis, period. shares net applied this of the measures. the if information

first in on or improvement quarter sales the $X.X gross expenses period. adjusted XXXX further or adjusted leverage of the EBITDA the $X.X Higher margin of of year versus quarter. the of all increased the first in to EBITDA and million prior Lastly, five-fold X.X% record SG&A net sales, net profit over our sales million to for X.X% contributed

sheet and to $XX is cash existing we under million of Subsequent $XXX debt. million credit quarter of completed cash, net agreement in outstanding onto restricted offering the Moving borrowing the and position, as equivalents our only liquidity amount March million cash raising in $XX aggregate and our available had equity XX, million approximately follow-on capacity XXXX, end, balance company. $X.X in to we overall cash of a proceeds

much XX HEAVY have When the position cash we completed currently the HEAVY agreement the of acquisition, under which million $XX additional at XX from also million you deploy to of to as offering, future debt end and availability a resulted million. earlier. as our the We warrants, equity that Bill consider available company over our growth the exercise strategy outlined $XXX in quarter $XX the current against cash in proceeds acquisition, investor the approximately use

of XXXX open and revised updating the full outlook XXXX Based on we let questions, HEAVY the for quickly me review our we completion to strong for the the outlook. XX year. recent acquisition, are our lines start our Before

$XX now the sales the and adjusted XXXX same of ending growth are period. XX-month period $XX for XX% EBITDA for to XX% million company of million December net expecting We total to

outlook change third We revised second strong the move remain of continue for a growth of stronger in the to stronger cost of earnings remainder XX outlook, for year, the And outlook today, million manufacturing In to in previously in full embedded periods prior to full half expansion, expect our and as quarter will the And for approximately commodity relative comparable the be while XXXX. increase the expenditures at we first March. select million quarters than noted overall implies across fourth EBITDA the somewhat half margin $X due we those in year-over-year XXXX XXXX, earlier HEAVY in the large CapEx for lapping year the we our one presented relates as we outlook. from margin cautious our capital to environment. assumptions adjusted further XXXX It to about to assumptions only the part the our additional in release $X.X in million account growth $X to that plant. the was

growth acquisition, from and and the we our XX executing As completed we quite you quarter raise And and capital against HEAVY the our can see remained results active again to recently forward look progress remarks, and please have. to might This reporting answer open are prepared Operator, quarter. for that our lines questions concludes the we our next you questions. now happy plan.

Operator

first is Our Andrew with from Please proceed Instructions] question with your question. [Operator Stifel. Carter

Andrew Carter

Thanks. updated Good given outlook you of X.X%, the appreciate quarter, caution environment, a some achieved year, cost a I around seemingly for have more afternoon. the of of kind that margin X.X%. subdued margin the an X.X% EBITDA kind a weakest first remainder you but input

Thanks. EBITDA there's then want margin So of kind help in mix. – just to in gotten will HEAVY year it over accretive one. but that pricing. understand particular the I caution be is XX And Yes, us caution, here acquisition inflation, you've

John Lindeman

for that do we believe report we of I seen environment. impact record quarter question. just an time I'll jump on all in for Andrew. well Yes, we the and Thanks did overall have look, Okay. full thanks the cost one, commodity mean, yet not

before, that time. position we For X,XXX We we environment. theorized mitigate we which in the the here know example, for fairly costs, other QX. increases freight skews discussed is overall a some us roughly to This price we the rising our also in take has easily coming help consider locked we inventory LTL as an And cost these which to there our given can is rising, sell. identifiable remainder XXXX of be but rate, across buy costs some that rising of may set is way new can

in acquisition that will appropriate have believe thought And You accretive. the point. we we HEAVY to be it guide seemed that this manner do at XX yes,

Andrew Carter

other this with keep Thanks. expectations growth that, capacity as manufacturing advance? circle like HEAVY where the about quickly asset brands the well of Thanks. to acquisition If just as businesses you onboarding? I kind in with a little think as platform instead Or realizing virtually potential manufacturing future acquisition I onboard bit require brands, guess, need how of a fits could in could potentially the this Do on we synergies? the talk nutrient capacity of with nutrient your you XX to up a

Bill Toler

Yes. a physical water, HEAVY Andrew, a these transportation fantastic facility platform Angeles. thank lot business. in It’s of XX but more Yes, going than nutrients. just days. you. good new, the to really we're have in a in very question, brand and to very small And Los full expensive need nutrient It's expensive a relatively It's look, industry ships water,

and ultimately, And lot around, moving a ship that's regional longer so capability less you I'd distance a model think term. where better a of had produce the things I to like and a water because lot world for think less to

of answer So the we there's would kind full have. a the platform, in like specific is us done question to certainly but that the to really to a building it's more your needs nice be to that give start range

Andrew Carter

on. pass Thanks, Bill. will I it

Operator

is with with question. JPMorgan. proceed Tiexeira your from Andrea next question Please Our

Andrea Tiexeira

wanted to think the Thank afternoon. math just back is – sales you're contribution $XX I HEAVY million at to try correct, guide a you. if and my Good to looking go for I from XX. follow

So if me wrong. correct I'm

got you've if Your decompose like XX% can us also HEAVY about decompose organic between guide figure, XX? and like, growth EBITDA in you increase I growth you X% implies by to for And if XXXX. can And organic the think pricing, help guide probably XX% that. about

John Lindeman

Yes, sure.

at HEAVY terms question. thanks, Yes. Andrea jump for this mean, organic versus XX. Just split is in Yes. of point M&A, the in really I growth and the which I'll

HEAVY I in terms numbers in the EBITDA ballpark. for on the the sort the on say breadcrumb would think mean, decompose think are certainly signing XX I the guide, of on XX. kind of you've of left HEAVY announcement in we bit trail can little I press you the the a I based mentioned math release

end March. do imply provided you when can certainly from guide organic I that it's up kind what strong and at from previously think a we the it's quite of EBITDA back that, our had of you

Andrea Tiexeira

take like we commodity about margin, into think volumes pretty pricing group expect that commentary think you you And signed not the but consistent X%? and therefore, in celebration Yes. to build I into that build can is that right? well? So, – only you I'm pricing, offline, back as thinking that used you can I that, accretive it was how how would I should for I with half. be costs X% if said the on a in have EBITDA into so of some general, cushions and freight and is, high what it right when it's your and

Bill Toler

There with good gone bit. some There's mean, increases, cost has resin up lot bottles of outlined, number going been a pressure things. I Yes. have obviously as on – a up John of

piece that other of getting higher. people just but The to with a labor physically the not is we're having labor, trouble find cost just

to production pricing assume whole hard we trying pricing one. having generally get sure So could very – HEAVY from yes, costs price the that that capability We the through cost to has our worked network adding the there accelerate there, And we're been increases base. at category. you as supply frankly, But to is pressure make on that's XX. we all in distribution

We out margin. in that had And some is really products got profitable have a off a question to up being really shipped the us we pricing of some question, it's that and But a overall, I on QX them ago, mix minute March. it margin challenge on come come. through. And forward. do demand challenging some time. the because There Andrew's are a You cautious can in where expect going Andrea, be fought great the lot when unknown with see we will appreciate we ended pent-up

little So overall, for like evolution we had probably I of But the got is year the we hoped. margin and where sit on we as a feel ahead the feel ourselves about we through think good there. coming

Andrea Tiexeira

Yes. this That's the on it. And the price you're increases. competitors testing same doing seeing

Bill Toler

has been Yes. few Yes. in. in the There factors a we pricing quite from some categories compete

Andrea Tiexeira

Perfect. I'll pass it on. Thank again. you,

Bill Toler

Andrea. Thanks,

Operator

our next with is Deutsche Bank. Kevin Please you Marek from question question. with And proceed

Kevin Marek

Thanks Good for the afternoon. question.

something as comment weeks can April seen two first about you the quarter, the XQ exiting if year. framing and what tougher kind growth wondering have in Just you've trends and through the comp through obviously May. of of we progress on

Bill Toler

absolute not as bigger with stayed expect a we're comps. actually QX, would up our The if very go it's running against quarter, up volume we has which Yes. our volume kicked as consistent QX. is strongest level But QX and bit, you QX, into

As year plus that a QX QX last XX, the half. now slapped plus in we before we was a with just had year we we're back XX had And we XX XXXs lapping. in cautioned the plus that our hit then

to, would we adjust continuing but comps are seasonally say from against, our absolute year. are running So last larger, volumes I which great, up is bigger in yes,

Kevin Marek

anything Got are categories the between based, noted trends – wondering but you the of within And some varying growth of are of there's that it. that there seeing, out. that said kind that, there mean, I prepared in growth broad was kind remarks, then are call noting? I'm Understood. you are to if I worth

Bill Toler

having of pretty similar doing nutrient year side all doing media, of though started year, say a out frankly, good mean differentiated kind year, our that category, a I had key it I again. is kind wonderful everything's on the XX%, Yes, they're but a same it the it thing gross well. equipment that of year, plus a the real year you couple had even grow categories on by we've place remained the a would brands, in was very when And of last strong.

Kevin Marek

of of be. stronger – It's Right. having I good be you and Actually, any more, on, just your would your look update XX kind to could balance appreciate great. What of conversations Thanks. environment, HEAVY I on one if there kind any that. what tack pipeline the M&A are does there it place up heels sheet, a the like?

Bill Toler

opportunity it's of a lot be than competitive these still the months Yes. for we shown to we're And people here good. that there in deals ago, that. now, doing in But massive in particularly these deals a ones in, coming market's us very environment, profile supplies growth I really have are businesses kinds out. the like then very category was then of and a activity were adding agriculture that the of do and of situation enter is the HEAVY to right doing in. There's that interest a we to Pipeline kind coming secondary, the XX, for controlled profit more think and the assets, number going out and six

that So interest I lot categories of in very a there's we're the that but pipeline it's good would with, have say as working people a well.

Kevin Marek

Thank it. appreciate I you. Understood.

Operator

our question. Jon And with question Please Blair. William from is proceed with Andersen your next

Jon Andersen

Good afternoon. question. for Thanks the

Bill Toler

Hey John, how are you?

Jon Andersen

the on strong way. Congrats brand across maybe of were of by road more would talk segment? a distributed? the relative Hi. start when Good, years of and but you about Are now, seeing, are mix from what a maybe strength Sounds you down the optimum good. hit versus you board, across an proprietary brand could and an targeting bit a run Wanted mix a about couple the business level. the be where perspective ask rate or the you’re overall of little kind think strong the you mix just like the more what you preferred to you

Bill Toler

Yes.

percent remixing mid total for the that’s even good and penetration of month of had brands numbers thing and of we over sort We our the a seeing margin keep of you and percent. And kind is for than high-XX’s, will, thing of that’s expanded in if sort which proprietary, historically bit kind to QX. we’re very margins. up faster a and good But key the us XXX points to XX%. now Our proprietary low a as XXX, one of of to driven growing, trend are that’s moved been in now. basis the brands XX’s as proprietary, P&L right a that the distributed a our And

partner drive if via focus XX’s talk get to that goal and now, partner brand innovation, and success XX’s. and then innovation and number we frequently have effectively. need and retail that with and that Our to our control us combine And own our really scale it what that’s like growers, we with to sort you can give destiny to that to us say three our be own differentiated from would customers our product brands. ultimately our our efficiently XX% be distribute And And with do five aren’t we years to and brands. and own or brands over give preferred M&A our own not about greater that distributor and into and we the own shop and we do but do in of very important, that know that I’d beautifully to and

each So two work to against don’t other. work they things, in hand they have and glove those

Jon Andersen

sense. Yes. That makes

XXX of the On timeframe Thanks. HEAVY is? basis. in what one in me. more what think about you over kind and across of talk state it you for kind some that the Could XX, you odd mentioned can concentrated do fashion? and to And on positive a affect fairly of country stores X,XXX, a Just I available why that hydroponic

Bill Toler

and of then in in right. this good products California, into and get the other selling and happens kind because very other was really got great also started there. of California, Michigan got and a to and They often people and word you demo in it’s of It’s as good a kind It mouth strong sampling of did a so And question. the got in industry, about surprise to business exposed early us sort customers not talking growers. presence program it’s Yes. a Michigan surprising. No, relationship

fourth spill know, And a another do opened the well And so really as is been really for gives time. the in they And rapidly, obviously well. Colorado you Oklahoma did Michigan all where And up off from we Oklahoma. of state and for sense, that And is everybody went them. around – course, really state well. Colorado a it long became

that’s to understand. easier So an one

or into a to retail is and work Michigan with create to with growers other goal there the few in they use take opportunities to for Canada, elegance a and that of the represents launched new how sort understand those works are two-part the brand partners years to of like of into all don’t get product simplicity into the and may not the things launched to HEAVY people’s it, its markets. get used locally Our states XX it formula simple this have and to brand people this our really that model each hands, heard market it ago that way

so the implementation literally and this. sales a of with had And team call our about today we started talking retail

It’s salespeople. of We’re keeping XX HEAVY the category all the kind experts.

our because nutrient building versus individual will more this building approach management category Our of now as an well, the we brand partner of to folks be keep brand just a brands together and the generalist, be all there’ll category this experts. take we’ll can approach. And

Jon Andersen

Good forward. the luck going Absolutely. on for help it. Thanks

Bill Toler

Jon. Thanks,

Operator

with with [Operator Truist your Instructions] Our Securities. next question is from Chappell question. Please Bill proceed

Bill Chappell

Thanks. Good afternoon.

Bill Toler

Bill. Hi,

Bill Chappell

XX. one on one HEAVY Just last a

it that as business? Because capacity you able grow probably all get as as year? expansion either different for be like last you your think about fast states didn’t it core it does industry, where grow saying CapEx in at or these as of fast to the was of take in right sales talked your constrained capacity a near-term. I to $XXX,XXX it as How I’m long move least into to grow in to to able kind and be or terms needs up be to it

Bill Toler

they XX%. It grew last XX% actually grew at – year, we

in gotten XX%, even are and that a at number a job been working They to of a this production up already put is we’ve tackle that ops there kind to changes We able XX% they so did bit great little going and products capacity, with so basic of of have of co-packed, we’ve XX%, right. to So both, week people, home, block that – and half a in. packed a some some in our limited heading they are higher in numbers, right. some get are

take So the we’re support can months sizes, weeks or And the line new half we stuff. with capacity expanding ready call just lot it’s that to now some three that the for as we get a back well. be some the that should is larger about to that’s go XX of in with – so buying of we Once in, which four basic growth think then going in. to

of highly formulations, are So blending processes technical bottling. they’re simple but these processes. fairly simple They’re and

once is workflow So once we only workflow built expand They’re right, the pretty issue, we the one biggest in, we get can and shift. really quick. also get the running capacity capacity that

And so things. get it shift another at people we opportunity can there, there’s another other find if to and

Bill Chappell

then And XX% how to of new was from new it really it’s updated look at year XX% how to outlook from XX, that’s to trying the from versus much I or customers new HEAVY could really that’s the lighting. organic continued looking right just now. year, your is But quarter top some strength tough it core not existing of be, rates, of some of the just states, much of reminder – of the it’s remainder customers at – markets, new the it seems understand I’m Sure. your the coming like just – via line of mining to and the upgrading first optimistic that just out-performance. guidance the for just second, markets

Bill Toler

base a of was out pushed people get of in Xx Arizona exception. then York they XX, passed and New stuff still QX day states before. the Jersey this is the mean, work think Arizona year, to aren’t arguing, I from pass when sure, is or November, the volume and next start Xx that way. small order our the right. is it going New year other up by That’s

So, it’s fastest very our area right? of still hard to in terms is the growing state. That’s say, biggest dollars California,

reasons just of the So They’re people larger building and sodium think pressure much use because is category is grower. is can but And farm. shifting of the high this brand to fast double identify. the it one grow every ended it type almost they’re a you of that’s We of fastest from across new just TAM going ramping, market that are There’s actually be lot think so didn’t growing to, massive in dollar, to every have on hobbyist growth underneath speaks people the LEDs. a than the home that thing say, amount and fastest. the like away is every kind and geography,

got you’ve haven’t moved So states that legislatively. even

are You’re doing in hobbyist seeing what growth the doing. back nice because they’re in,

to aspects from And all is lot growth so just that got because you a a different business have you’ve don’t industries. of fun so watch it

Bill Chappell

for me, just absolutely. pipeline. the mean, they’re years. past had last No, Hawthorn publicly on few the for now M&A And I went in you digging the said they than one past interested M&A public, since is then been in more

you got top bidding comfortable So hey, out now are pricing a we’ve dollar a the war, that lot you all hear, of sellers I deals ends these don’t the just kind want market. potential of and it of up

Bill Toler

Yes.

company as disciplined try we all, I disciplined be a their to think, well. first overall of company,

important that And bids move I for going and move needle, definition, show ones the to think will that different needle. they that’ll up are right. show appropriate a for the up our little bit have And we’re their right. to

For little have ours, market a greater probably to things terms them, they are far cap of than higher interesting them. that a which in bar has

a lot and company can building to on For that of a value us, basis our we lot have just there. things of do from keep a tuck-in

Bill Chappell

Great. Well, so thanks much.

Bill Toler

Thanks, Bill.

Operator

the reached remarks. to now end the turn call closing have back management I’ll the question-and-answer We over of session. for

Bill Toler

part being for much we more very the And today. good much. all get care. to tell I’m about you it. call you Take forward the so Thank and down news in QX to look road. great. Thanks the glad books That’s a

Operator

may conference your at for this you lines concludes Thank you disconnect time. your participation. This and today’s

Hydrofarm (HYFM) 14 May 212021 Q1 Earnings call transcript